What is the best way?

I don't know if you could have possible asked a more open-ended question. "Best" is a matter of personal choice. Most people use an external hard drive, and some prefer a backup service.
 

My Computer

As Archpope said, you could not have asked a more open-ended question.

You could just use a program like Nero to write only pertinent data to CD or DVD. Should your hard drive fail, this type of backup will still require you to install a new hard disk, re-install Windows and all other applications, and then copying the data back from CD or DVD.

Another solution would be to use Windows Backup, which can create a complete image of your hard disk. Should your disk fail and need replacing, you will still need to reload Windows in order to use Backup to perform a restore.

There is a third party solution: Acronis True Image. Like Windows Backup, you can use it to create a complete image of your hard disk. Restoring the disk in case of failure is easy. Just boot from the CD or DVD, and run the restore to get your computer back to the state it was in since your last backup, and then continue working as though nothing has changed.

You can get Acronis here: Backup software for data backup and disaster recovery in Windows and Linux - Acronis

But again, it really just depends on how you want to be able to restore your data, and whether you want to be able to recover individual files (in case of accidental deletion) or if you want to create your own recovery disks.
 

My Computer

System One

  • Manufacturer/Model
    Custom Build
    CPU
    AMD Phenom 9600 Quad
    Motherboard
    ASUS MB-M3A32-MVP Deluxe/WiFi
    Memory
    2 x A-Data 2GB DDR2-800
    Graphics card(s)
    ASUS ATI Radeon HD 2400PRO
    Monitor(s) Displays
    SAHARA 21"
    Screen Resolution
    1600x1200
    Hard Drives
    2 x 80GB Seagate (I) 2 x 120GB Seagate (I/S) 2 x 200GB Seagate (I/S) 2 x 250GB Seagate (I/S)
    PSU
    800W
    Case
    Thermaltake Tai-Chi
    Cooling
    Tai-Chi Water Cooler
    Mouse
    Logitech
    Keyboard
    Genius
    Internet Speed
    384kbps
    Other Info
    Currently dual booting between Vista x64 Ultimate Windows 7 BETA x64
Personally I would go for a USB harddrive. You can update the backup as you work on your current drive and take the data too any computer with a usb port and compatable os.

I have backed up data onto dvd that I know will not change much but as you do a one backup the old dvd become redundant.
 
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My Computer

System One

  • Manufacturer/Model
    Self Built
    CPU
    I5 3570K
    Motherboard
    Gigabyte Z77-DS3H
    Memory
    4 x 4GB corsair ballistix sport DDR3 1600 Mhz
    Graphics card(s)
    Gigabyte Geforce GTX 660 TI
    Sound Card
    creative x-fi
    Monitor(s) Displays
    Primary CiBox 22" Widescreen LCD ,Secondary Dell 22" Widescreen
    Screen Resolution
    Both 1680 x 1050
    Hard Drives
    2 x 500G HD (SATA) 1 x 2TB USB
    PSU
    Corsair HX 620W ATX2.2 Modular SLI Complient PSU
    Case
    Antec 900 Ultimate Gaming Case
    Cooling
    3 x 80mm tri led front, 120mm side 120mm back, 200mm top
    Mouse
    Technika TKOPTM2
    Keyboard
    Logik
    Internet Speed
    288 / 4000
    Other Info
    Creative Inspire 7.1 T7900 Speakers Trust Graphics Tablet
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